Regional battle over major farm bill

Landmark farm legislation cleared the Senate Agriculture Committee Thursday, promising wholesale changes in commodity programs but also opening up a major breach with Southern growers angered by what they see as an unfair tilt toward the Midwest Corn Belt.

The 16-5 vote—counting proxies — underscored the regional split, with two former Agriculture chairmen from the South and Senate Minority Leader Mitch McConnell from the border state of Kentucky joining in the opposition.

Story Continued Below

The action followed a long night of final adjustments in what proved a vain attempt to buy unity. Cotton won concessions on its own revenue protection program, including a decision to lift the acreage cap on land enrolled. But the leadership resisted any return to a countercyclical program with target prices, and Sen. Saxby Chambliss (R-Ga.) bluntly warned that peanuts and rice will take a “huge hit” and are left “without any safety net whatsoever.”

Indeed, corn and soybeans appear the big winners in what would be an historic shift away from direct cash payments and price supports in favor of new forms of subsidized crop insurance.

These cash payments have become almost impossible to defend politically given the record farm profits of recent years and growing national debt. Instead the Senate bill proposes to save an estimated $50.2 billion over the next decade by repealing these and related commodity subsidies and then reinvesting about $29.24 billion into a new government-supported “shallow loss” insurance program to complement traditional crop insurance.

On average, baseline spending for commodities would be reduced by about a third, but cotton, rice, peanuts and wheat all end up significantly below this mark, while corn and soybeans are well above.

Breaking down the numbers, estimates show that corn’s share would fall 25 percent, while rice drops 70 percent, and peanuts and cotton lose in the range of 41 percent.

Midwest producers would argue that the South has more to lose, since it benefited disproportionately from the direct payment system. And part of the shift is driven by farmers themselves, opting to change crops given the remarkable ascendancy of corn with the ethanol boom.